Technology

Q&A: What Drives Loyalty in Grocery Post-Pandemic?

Local products, safe and seamless shopping experiences are an imperative for retailers
iTradeNetwork; CEO Rhonda Bassett-Spier
Photographs courtesy of iTradeNetwork

Rhonda Bassett-Spiers is president and CEO of iTradeNetwork, a San Francisco-based supply-chain software specialist serving the food and beverage industry. Last March, the companywhich has more than 8,000 supplier/grower, distributor and retailer customerslaunched an online forum and marketplace meant to connect suppliers with buyers to address acute supply-chain gaps emerging as the COVID-19 pandemic took hold.

Now, a year after lockdowns began, the status of U.S. supply chains is getting fresh focus from the federal government, and retailers are looking to see the extent to which the pandemic has permanently altered consumers' behaviors and expectations. Bassett-Spiers spoke with Winsight Grocery Business about the changes that COVID has wrought and why, across the supply chain, transparency and trust will be more of a competitive necessity than ever.

Christine LaFave Grace: We hear about the myriad ways the COVID-19 pandemic has accelerated existing trends. What has the pandemic accelerated when it comes to grocery supply-chain management?

Rhonda Bassett-Spiers: In the food and beverage industry, what COVID has shown is just the lack of resilience in the supply chain. When you think about just how important food is to us, it’s rather surprising that there hasn’t been, even pre-COVID, more focus on supply-chain resilience.

We launched iTradeMarketplace early in the pandemic because what we found is, while large retailers’ volumes were increasing, obviously foodservice was decreasingpeople weren’t in schools or at sports venues, things like that. The idea [was] to allow supplier discovery. So if I’m a buyer and I’m looking for supply, I can go and find a supplier that I may not traditionally do business with. That was one piece of it, and the other was to attempt to limit the amount of waste. Because what we were hearing about and everyone was seeing on the news was that supply or food was available, but they couldn’t get it to map to the demand. iTradeMarkeplace really exists to map supply to demand.

There are a few themes that we see coming out of COVID with our customers. One is clearly supply-chain resilience—that’s everything from getting better at planning and forecasting to having more suppliers, business continuity with suppliers. We also saw new trading relationships that were enabled last year by retailers discovering new suppliers and starting to do business with them.

We believe another trend will be locally sourced. A lot of midmarket retailers today differentiate by buying products from local farms, local suppliers. That’s why they charge a higher price point; they can differentiate from the large retailers. But we believe that most if not all retailers—not just midmarket but larger retailers—are going to have to look more carefully at locally sourced. One because it allows for continuity in supply, so their shelves will remain stocked. The second reason is they can differentiate and compete against the midmarket and they can charge a higher price point.

On the consumer side, what we see from some of our initial surveys is consumers feel better about buying product that is locally sourced. They feel like it’s their community. They can look out their window and feel comfortable—“Yeah, everything’s OK in my community, but I don’t know about 1,000 miles away.” We also believe consumers will pay more for that peace of mind.

Also, we see food traceability gaining more interest. With all of the contamination events that we’ve historically had, we’re getting better at tracking them, but still, much of it’s manual. [And] when we look at traceability, it’s not as if there hasn't been contamination events happening for decades. But now, they’re more public, because as soon as they start to happen and are reported, they’re all over the news. If there is a head of romaine that is found to be in a particular region creating a contamination event, because they don’t isolate where that romaine is from and where the other part of that yield went to, pretty much everybody just doesn’t buy romaine.

Traceability impacts not just that farm or just that distribution center; it affects everybody in the supply chain. Our newer [traceability solution] adds machine-learning capability so if there is a contamination event, we can pretty much trace where that food originated—the seal, the lot, and ensure that that food is pulled off the shelf. That’s why traceability becomes so important. It’s continuity of supply and it’s also minimizing damage to all of the brand and to a whole seasonal crop.

What are the biggest supply-chain management pain points that remain for retailers? Where are retailers on the learning curves of awareness vs. adoption as far as what's available from a technology standpoint to support traceability?

They’re worried about being more efficient and more resilient. So it’s everything from the planning and forecasting to logistics, making their warehouse and distribution centers more efficient and removing those bottlenecks is important to them.

On the midmarket, we have found, they’re not as technology-savvy as large retailers. Many of those businesses were started as family businesses, and there’s an opportunity there for them to leverage technology to enable trading relationships. Our message to them is, it’s time to let go of the yellow stickies and the highlighters.

We have one grower shipper, a very large one, and they put traceability [labels] on their products and they do it mainly for marketing purposes. They want the customer to scan it and go on their site and provide feedback. I think midmarket retailers are missing out on that opportunity as well to start to think about leveraging technology to get more feedback from customers. There are so many uses [for traceability] other than just the negative part of it that is associated with contamination or a recall.

We’ve seen, for example, with Walmart and their new supplier quality excellence program (SQEP)—the reason they’re doing this is not just for traceability information, but they also want to be able to plan staffing and other needs for their warehouses.

Today, you get a range of dates when a shipment is going to arrive. But if you had precision around the date a particular supplier is going to be delivering product to you, one, you could decide what stores to put it on, based on outages, so that you can use that product in stores that need it the most. Two, you can staff your warehouse or distribution center. You could even minimize your warehouse center hours, if you could have all of your suppliers deliver in a window on a day. So there are benefits to everybody, not to mention that you also get the traceability data.

When we think about loyalty—what drives loyalty and how things may have shifted in the past year—to what are consumers going to be loyal going forward?

That’s a hard one to answer, because I think there are a few dynamics going on. I think there are consumers that have always shopped at their local grocery store no matter the size, whether it’s a large retailer or a smaller one. They used to go in the store and browse; now it appears consumers spend less time in the store, and they go in with a list and they basically buy those items.

The idea of having a lot of product in a lot of aisles spread out to the consumer—it’s going to take a while [to go back to that], if it ever goes back to what it used to be. I do think home delivery is a trend that’s here to stay. I don’t think it’ll be the same level that it was during the height of the pandemic, but I still believe there are people that have transitioned and it’s now turned into a habit and they’d like to be able to order online.

So perhaps what will change is the footprint of a particular grocery store in the future will be smaller because there’s less need to have every product in the rainbow because there are fewer consumers walking around looking. I think that consumers are still loyal; I think it goes back to [the idea that] consumers are going to be a little more safety-conscious—buying locally and frequenting those places where they feel safe. I think a lot of retailers have gone the extra mile or 10 miles to provide a safe experience.

WANT BREAKING NEWS AT YOUR FINGERTIPS?

Get today’s need-to-know grocery industry intelligence. Sign up to receive texts from Winsight Grocery Business.

Trending

More from our partners